There is increased hedging activity in the agri-commodity exchanges─ which is their main purpose ─ though trading volume is just a third of what it was in 2012, says a research report in The Hindu BusinessLine.

Turnover at NCDEX and MCX agri-basket put together was Rs 7.8 lakh cr in 2016 down from Rs 21.2 lakh cr in 2012. At NCDEX, volume in the first eight months of this year was Rs 3.43 lakh from Rs 5 lakh cr during the same period last year.

The report cites regulatory uncertainty, Commodities Transaction Tax (CTT), the payment crisis at the National Spot Exchange Limited leading to suspension of trading on it in July 2013, higher margin requirements and last year’s demonetization of Rs 500 and Rs 1,000 denomination notes as the reasons.

Traders have turned away because of government whim, the report says. Chana contracts were suspended in May 2008, re-launched in November that year, suspended in June 2016 and re-launched in July 2017.

Trading in tur, urad,rice and wheat remains suspended since 2007. This is true also of soya oil, sugar, guar gum, rubber and pepper.

CTT was levied in 2013 not only on agri-commodites but also processed items like soy oil and crude palm oil. Jobbers lost interest as margin evaporated.

In 2015, SEBI took over from the Forward Markets Commission as the regulator. The following year, it hiked initial margins and reduced the maximum position limit for clients and members.

Demonetization in November last year caused funds to shrink, affecting volumes.

But hedging activity has increased. MCX told the newspaper it was seeing good hedging participation in commodities like mentha oil, crude palm oil and cotton.

Corporates are taking hedges to comply with SEBI’s Listing Obligation and Disclosure Requirements, the report said.

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I Do Not Understand Bt Cotton technology; I Know It Works

Y Kallanagouda Patil, 46, of Uppinbetegeri village in Dharwad taluk owns 52 acres jointly with his three brothers. He holds a diploma in agriculture from a school in Raichur.
Patil grows cotton on ten acres, apart from sugarcane, potato, Bengal gram, jowar, tur,moong and vegetables. He uses groundwater to irrigate his fields. The water is drawn from a depth of 280 feet. Electricity is free so he flood irrigates the fields, except the one under banana where he uses drip irrigation. He does not micro-irrigate cotton because it is closely planted and has to make way for another crop after eight months.
This farmer has his cost all worked out. Making quick mental calculations, he estimates the cost of cotton crop at Rs 22,500 an acre and the realization from 17 quintals an acre at Rs 68,000. He had planted Bayer seed. ‘I do not understand technology, he says, all I know is if I use Bt seed there will be no

Pests Snack on Chilly But Not Cotton

F Basavaraj Rudagi, 48, did not grow cotton before 2008. This farmer from Saundhi village in Dharwad district’s Kundogol taluk made a partial switch to Bt cotton as chilly was susceptible to pest attack and yield was declining. From five acres in 2009, Rudagi had fifteen of a forty acre joint farm under cotton this year, when smartindianagriculture caught up with him in February. He tried out Bayer in a change from Mahyco and Raasi seed.
Rudagi says he got 11.5 quintals (100 kg) an acre from his rain-fed crop and at Rs 4,050 a quintal, his realization was a little over Rs 46,000. The cost, he says, is Rs 26,000 an acre, excluding rental earnings had he leased out the land. This does not mesh with the profit he claims he makes, but then he admits to not keeping crop-wise accounts.
Rudagi also grows peanuts, coriander, gram, safflower and jowar. There is safety in diversity. And yes he plants pigeon pea or tur around the cotton crop for bollworms to feed on so they are not forced by the survival instinct to develop resistance to Bt protein. In this sense he is quite a cut apart. Low cotton prices are worrying but what is the alternative?